Page Rank

AIG has been given access to $182 billion in taxpayer funds in the past 6 months. Recently it paid out $165 million in retention bonuses to employees in the company's financial products division. Those bonuses were written into employee contracts written in early 2008.

In a breathless run to smite those who took government funds and used them to enrich their own players, the House last week passed legislation that would have taxed the bonuses such that the recipients would in essence get to keep none of them.

Webmaster Tools

No one disputes that paying out those bonuses given the country's current predicament -- which was exacerbated in great part by AIG's reckless behavior -- was inappropriate and distasteful, contract or no. But the legislative proposals on the table to rectify the situation may end up doing more harm than good in the broader scheme of things.

Analytics

I think there are certain constitutional questions about the imposition of a tax on a limited group of people," said Sen. Kent Conrad, D-N.D., a conservative Democrat who chairs the Senate Budget Committee, on ABC's "This Week" on Sunday.

One objection to the bills: They use the tax code as a punishment for a select group of people and they do so retroactively, meaning they apply to money already paid out. Another concern: Companies in the private sector won't feel comfortable doing business with Uncle Sam if they think he'll change the rules on them after a deal is done.